Videogame maker Riot Games has announced plans to lay off approximately 530 employees worldwide, which represents around 11% of its total staff. This decision comes as the company seeks to streamline its operations and refocus its efforts following a period of ambitious expansion.
In an internal communication to employees, Riot Games revealed that it will be discontinuing its Riot Forge publishing unit and downsizing its “Legends of Runeterra” team. These adjustments will take place in the coming weeks.
To support affected employees during this transition, Riot Games has committed to providing a minimum of six months’ salary as severance pay. This gesture aims to assist affected individuals as they navigate their next steps in their careers.
Chief Executive Dylan Jadeja acknowledged the company’s recent growth and emphasized the need to realign priorities. He expressed, “Today, we find ourselves lacking a clear focus as a company. Simply put, we have taken on too many endeavors simultaneously, and some of our significant investments have not yielded the expected returns.”
Owned by Chinese tech giant Tencent Holdings, Riot Games is renowned for its popular game “League of Legends.” Over the years, the company expanded its portfolio and workforce, leading to increased operational complexities and higher costs.
With this strategic shift and workforce reduction, Riot Games aims to regain its focus and optimize its resources. The company remains committed to serving gamers but recognizes the importance of operating with improved efficiency and effectiveness.
As Riot Games proceeds with these changes, it anticipates a more streamlined and agile organization that can better deliver on its mission while fostering sustainable growth.
Restructuring to Ensure Sustainability
The continuous growth of costs has reached an unsustainable level for our company, leaving no room for experimentation or failure. This poses a significant risk to the core of our business. It is not a move to appease shareholders or reach quarterly earnings targets.
The decision to implement layoffs was a necessary one, driven by the surge in prices for basic necessities in 2022. The pandemic’s digital-demand boom has subsided, resulting in reduced spending on gaming. Moreover, economic uncertainties in China have prompted major tech companies, such as Tencent, to scale back their investments.
To combat these challenges, we initially implemented hiring freezes and cost reduction efforts. However, these measures alone were insufficient. A more focused approach is necessary to prioritize initiatives that provide the most value to our players. Regrettably, this requires making adjustments to the area where we allocate the most resources—our headcount.
